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tv   Squawk on the Street  CNBC  November 5, 2012 9:00am-12:00pm EST

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>> i am right on energy. i am right that a uniter is necessary. you cannot keep dividing this country. you can't do it. >> jack, thank you very much. great talking to you. >> thanks a lot. >> that does it for us today. we'll see you tomorrow. right now it's time for "squawk on the street." good morning. happy monday. welcome to "squawk on the street." i'm melissa lee live from the new york stock exchange. we're kicking off what could be a very busy week on wall street. the presidential election is tomorrow. look at how we are setting up. implied opens across the board to the downside s&p looking to lose 2.5 at the open. as to europe that's where action is. jitters about greece and the bailout plan sending markets there lower. italy down 1.4%. voters cast their ballots in the presidential election here. greece must win key support for
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measures necessary for a bailout and delegates meet in china to decide a major change in leadership. >> 3 million is the number of ipads and ipads minis sold this weekend sending stock higher premarket. the question is what's the breakdown and can this reverse the steady decline in shares since they hit the record high of more than 700. >> recovery from sandy continues. manhattan gets power back and most subway service is restored although millions in the region have no power or heat with tens of thousands this morning homeless. >> we'll begin with a big week for the market. first up tomorrow's presidential election in this country. polls show the race between barack obama and gop challenger mitt romney to be a dead heat. on wednesday the greek parliament is due to vote on a package of austerity measures and then china's congress convenes for once in a decade leadership change. that's not evening mentioning ecb. there's been some that have said this is potentially the highest concentration of risk of the
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entire year. >> i heard this. it's embarrassing to hear. what's happened the whole time is there are managements that have made money during this period and managements that have failed and models that have made money and models that have failed. i spent a lot of time this weekend going over the last five years of stocks. what i find is that you have the ibms which delivered. moved from hardware to software model, consulting and hewlett packards that failed. when you do risk on and risk off, i'm an s&p trader. i trade the s&ps. forget individual stocks. if you want to play that game, fine. >> a lot of institutions play that game. not just hedge funds. a lot of mutual funds. overall investors play that game. risk on and risk off investing for more than a few months is difficult in an environment like this where you are constantly dealing with this. >> what made you money is to identify stocks that are not part of the vortex. if we don't want to make you money, if you at home want to be
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completely baffle and trade every minute, risk on, risk off. i can do that for you. i can trade it for you. i can also bet an 18-1 shot and have that come in and take the over in tonight's eagles game. it's not valuable. it does not help you. >> that would be great if all you had was red light or green light and switched that on and off all day long. >> if you could make money, that would be great. the exercise isn't to make money, i'll play the game. i feel our goal is to try to help people make money. >> to carl's point it is probably going to be one of those weeks or period of weeks where -- >> do nothing and hold your dividend stocks. >> my mother and my sister. >> all morning i heard it's risk on, risk off. why don't we just advocate? why don't we talk about politics. i'll give you my pennsylvania rap and ohio rap and forget individuals stocks and not talk about how stocks are doing better and certain stocks are worse. advocate our job at cnbc.
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easy enough. i can play. >> you spent weeks making good calls on coal stocks and things that pivoted around the debate. >> i like sector analysis. i think sector analysis is good. when i hear risk on, risk off, don't buy stocks. no. i think the coal stocks have had the run and can get hammered here because i believe obama is going to win. >> don't make overall calls on the market risk on, risk off but make sector specific calls or stock specific. >> totally. the reason i say this is because i don't want to fall prey to people at home selling everything because they hear risk off. that's what happened for a couple years there. they left the place. >> we glossed over what you said. you think obama is going to win.
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explain. >> i know i have disagreements here. >> there's a lot going on in there. do you even have room in there to pick electoral votes of states. >> i have room to talk about the greatest rookie ever in my fantasy league. total vacuum. i feel all of the -- this is my rap. i say swing states all go for obama and that the horse race is made up of people who are not necessarily polled correctly and i think these states are obama states. i'm just saying if it's a swing state, it goes to obama. >> others would say independents skew toward the challenger. some polls may not reflect enthusiasm. >> so happy when we're no lodngr talking about this. god. sorry. >> i'll talk storm then.
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>> let's talk about netflix poison pill they just put in. that's big. >> that's a great story. >> of course they got that saying we're going to protect shareholders. make sure everybody is okay. >> you can't firebomb that. i'm willing to firebomb the election as a way to -- i really do believe that the swing states all go obama, but i do relish as david just mentioned the idea that we could focus on an individual stock that is not connected to the election. >> by the way, i know it was through options but he was a little over nine. >> i will have to check my trusty notebook. >> the poison pill hits at 10%. >> 9.98%. >> carl can't buy more stock. you would expect it would do
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that. it gives them a weapon at least to potentially thwart him or not even thwart him but gives ability to continue to negotiate and things of that nature. they had to do that. who knows what his real plan is there. you never know with carl. >> he has said in other interviews that selling it has crossed his mind. getting management to sell the company crossed his mind. the question is if there are other major shareholders with whom icahn can kind of tag along with and perhaps combine the change. that's unclear at this point. right now it looks like at least from a purely icahn driven management change, that is more unlikely to happen with this poison pill which is why the stock is lower and the hurdle is much higher now. >> how much of this -- you have -- >> it's not clear he would go beyond. he doesn't necessarily need more shares to influence other shareholders and to try to make his voice heard.
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it does prevent him from trying to take control which seemed unlikely. it's one more thing that they have when they sit down and negotiate with him about board seats or whatever it might be if they get to that. >> this is a chesapeake. this is one that he wants to throw in play versus this is a company where he just has his sights set. >> i don't know. what i always marvel at is carl's ability to get involved in situations. sometimes i feel like he doesn't fully have the game plan mapped out but feels he can create his own outcomes unlike perhaps anybody else. he can create his own outcomes. just by getting involved things change and then i think he just likes the sport of it as he'll say many times, he's a poker player. he tries to get himself into a position where he has the advantage and can press that advantage. >> when you go after chesapeake, you are going after mcclinton whether you like him or not. netflix, isn't it hastings?
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isn't he the king the netflix? no. let's say -- >> you've been watching a lot of "game of thrones" or what? >> i tried to watch that with my daughter. i was mortified. let's say you are going after amazon. in the end doesn't he has the cards? >> i don't believe he has the votes. >> you don't? >> i don't remember there being special voting rights for netflix. >> i'm just saying if he comes out and says everything is great. you don't think that -- >> no. not especially when there are shareholders saying if you close down international business and generate more cash flow from domestic streaming business, you would be doing a lot better. >> okay. >> this company would be much stronger. that's not a real growth plan but a different approach that
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some shareholders would raise. >> there's a hold on another generation of netflix. i think that the younger people love netflix. it's a way to watch tv. and that demographic is something that someone should cover. no one seems to cover it. >> i almost feel like netflix is a younger generation but not a young generation because young generations don't want to go through netflix. they don't want to pay. you can get video for free these days. you watch it on youtube and you watch it on hulu. >> there are young audience members for whom netflix is a daily staple. watching "dora." >> let's talk about apple. it's another big stock we're watching this morning announcing it sold 3 million ipads in three pads since launch of new ipad mini and fourth generation ipad. the company says that's double the first weekend milestone of
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1.5 million wi-fi only models sold for third generation ipad back in march. ceo tim cook says apple practically sold out of ipad minis as apple shares are trading close to bear market territory. nice reversal on the shares. higher by 1.4%. trading lower prior to news. the thing to make clear about this release is they lumped together sales of ipad mini and fourth generation ipads. it's a combined number, which they are trying to compare to the release back in march of the third generation wi-fi only ipad which is apples oranges to here. in talking to analysts this morning, brian marshall for one, he said he views the 3 million number combined as positive and of the 3 million, two plus million were ipad minis. those are really selling like hot cakes. >> can it break the vortex? >> that was my question. you look at the trading pattern of apple.
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over the last month but even just last week. shortened trading week. big rally on thursday. big rally led by tech stocks on thursday. apple did not participate. on friday apple closed at session lows down 3.3%. this vortex seemed to be getting deeper and deeper until this data point released this morning. is it enough is the question? >> i regard this as frightening conversation i had with the man who wrote the book who just said this is about whether the new guys can take the vision to the next level. that was right at the top. what walters view was that itv was definitely jobs' baby. it would have required him to beat up on our bosses, comcast, time warner cable, just like sony. cable companies hands are
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stronger. it's not as strong as steve jobs. it's worrisome. >> is it that or just the fact that it became just too top heavy of a component of a bunch of various indexes. >> everybody knows it. >> does over own mean something? >> i think so. you don't like to be too antidotal. i happen to be in new orleans for my daughter's back to school. i kept thinking that someone would talk about something else other than apple. again worrisome. everyone owned it. elevator talk. what do i do? okay. i'm concerned. i feel like you have to right size apple. that's my take. too much for everybody. if they can somehow not have -- the turmoil shook me up. the speech by isaacson who says it's a year. now i can start talking about what new products are on the book. i agreed not to talk for a year. now i'm talking.
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it's itv. itv requires cable. you waited a year, isaacson. use the conversation to be able to say itv was supposed to be 2013. i just don't see cable companies caving. i think that matters. there's a lot of people who want it. >> you hear about 800 pound gorillas. they tend not to make them that big if you know what i mean. we're still analyzing the recovery of sandy. east coast looking to recover from superstorm sandy. in new york city, more of the transit systems are being restored. most schools are open. there's still about 1.5 million outages in the states hit by sandy as colder temperatures now hit the region. the lines at the gas stations continue to be long as you have no doubt seen over the weekend and we should point out it will get cold. it's going to get stormy. there's a nor'easter on the way to this part of the country coming wednesday, thursday. it's going to make recovery even more difficult. >> just what we need.
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>> now there's some discussion in the "times" about impact on retailers. ports are disabled to some degree. warehouses are damaged. rail service is spotty. inventory will be messed up through black friday and potentially through the holidays at large. >> the more you dig into this one, the worse it is. >> the larger the losses get and larger estimates of loss gdp get with each passing day. things you may not think about. people who aren't necessarily harmed by the storm thankfully but their businesses were. whether it even be somebody as carl was referencing a "the new york times" story talking about businesses that can't get shipments of things that they would pass along and so will not be doing so for quite some time. so many warehouses are out of line and those moving goods for may not able to get gasoline. >> i find that terrific article in "the new york times" today. business as usual. these other areas, look, are
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there really looters on long beach island? really nothing left of staten island? the more you check it out -- there are police going by by beach house saying right now it's safe. right now it's safe. right now it's safe? not in long beach island. staten island. friends there this weekend just shocking. queens, friend of mine doing rehab charity, just shocking. i don't feel the -- the papers don't seem to indicate how shocking it is. helicopters do. >> i think there's a sense -- a broad sense that at least in the metropolitan area, mta, mass transit authority has done a good job restoring service. we all got here to work with very little issue this morning. doesn't stop jpmorgan today on retailers at least from upping target to overweight and price target goes from 66 to 76. talk about good comps. easy comps.
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accelerating sales. decent valuation. >> retail has been strong. go back to what pbh was saying. don't want to be too new york centric. what david said is true. it's a shutdown of businesses. >> is it enough to shift your retail trade to retailers that were not exposed to sandy as much opposed to exposed to sandy? do you think, you know what? maybe the quarter could be in jeopardy because of this. >> you can asterisk this and come back in time for black friday. i think it really is a question of whether they have christmas or not. no retailer can afford to miss christmas. none. they must all have a christmas. >> we'll have more on the lingering effects of sandy later on and the long unbearable wait for gasoline. we'll talk with one gas station owner with quite a story to tell. prices down in two weeks more
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than since 2008. dow is down 28 points. more "squawk on the street" is coming back live from post nine in a moment.
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the latest survey shows that gasoline prices have taken the biggest drop since 2008 down 21 cents a gallon to more than $3.54 but not easy for folks to get gasoline hit by superstorm
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sandy. there continues to be long lines at the pump. >> reporter: the fuel supply problem in this region should have been addressed by barge deliveries over the past few days at the port behind me as well as truck refueling in this area of new jersey, which is home to so many terminals. problems in distribution are plaguing this area. power has been restored in many places but not to a number of the gas stations that serve our region. that's compounding the problem of driver anxiety and long lines at the pump where fights have been breaking out and cops called in. this part of new jersey is home to the 20 or so gas storage terminals or many of them. over the past few days much progress has been made refueling terminals run by kinder morgan, phillip 66, hess and new star are partly operational and they have been focused on the truck racks where trucks come to get
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supply for gas stations. they have been surprised at the lack of truck traffic. that's because power outages means the gas can't be pumped after it arrives. power authorities are of course laboring to turn the lights back on and government officials are doing what they can to distribute and ration gas. it could be at least another few days, melissa, before we're out of the woods. or out of the gas lines i should say. >> all right. kate kelly, thank you very much. very difficult situation for many people in this already hard hit area. making money on the first monday of november, cramer will show the way with his mad dash up next. a big variable in insurance. how much damage caused by sandy will actually be covered. let's take another look at futures in the first trading day of the week. very big week. we're holding steady here with the dow open about 23 points lower. much more "squawk on the street" straight ahead. trading tools fo. look at these streaming charts!
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less than five minutes before the opening bell. time for cramer's mad dash ahead of that market open. kbw getting sold to stifel. >> this is the monumental moment. survived 9/11. very strong firm. not a lot of bank ipos. focused on bank research. commissions are very low. if we get consolidation and we get situations like the acquirer going up, i spent a lot of time going over this group to try to figure out why it's been so
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poorly performing. dodd-frank, commissions -- >> when you say this kbrogroup, define your terms? >> leaning toward brokerage than actual mortgage and having credit cards and what i see is the world is divided. companies that used to do a lot of ipos and have big commissions and big fees on cdos, these are the companies that are struggling. >> they are. we've seen them rally in the likes of morgan stanley and goldman sachs recently. the bigger question is can you get r.o.e. up 7%. it's the capital requirements and dodd-frank. >> when i see these acquisitions and stock goes up, banks have to start acquiring other banks again to have profit margins go higher. >> we're not talking about smaller guys who aren't public talking about commission dollars go down and capital makes it
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very difficult in the brokerage business. still to come, handicapping tomorrow's election effects on the market and front lines of the gas lines of the local station. get ready. another big day of trading ahead. the opening bell is up in three minutes. for over 60,000 california foster children, the holidays can be an especially difficult time. everything's different now. sometimes i feel all alone. christmas used to be my favorite. i just don't expect anything. what if santa can't find me? to help, sleep train is holding a secret santa toy drive. bring your gift to any sleep train, and help keep the spirit of the holidays alive. not everyone can be a foster parent, but anyone can help a foster child.
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he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade.
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just saw opening bell for monday, november 5th here at the big board. a military veteran forum for human resources being held. the food bank for new york city so obviously two groups very involved with helping our men and women in services as well as recovery from hurricane sandy. all right. a big week, jim. holding steady here. >> a major rollover. i heard that talk more than i heard in some time. >> you talk about big macro risk on, risk off plays. dollar index above 200 for the
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first time since september 7th. this notion, jim, that if governor romney wins that the fed serves and bernanke leaves early. do you believe any of that? fed policy pivots around who wins? >> we go back to a tighter money situation. i think that whether you like it or not, there's a lot of people that feel that's good for everything. i think what is such an interesting moment is i always come back to individual stocks. we talk about retail. we talked about housing. these have made major comebacks and those stocks are either at or well exceeded where they were before it began. i think that's a factor of bernanke more than a factor of obama. >> a lot of people said the fed will have to be more clear how they respond to better data if it keeps coming. >> one question, of course, is twist which will expire at the end of the year. we talk about 85 billion. that will go to 40 billion in nbs after the end of the year.
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do they keep twist going or not. some likening that to the fiscal slope in some ways saying there's also that easing slope if you will or could be if they actually stop those purchases in terms of twists. >> gold back below 17, 16 something on friday. >> that's closely watched in relationship to whether or not people believe romney will win or not. another one of those political -- what has become a political trade at this point. >> again, i feel like if we default to trying to use the election prism for everything, we'll falter here because there's a lot of stocks that are going up. because we looked at the quarters and quarters were good. we had a good week. the last eight days the earnings have been better. that just happens to be a fluke of the calendar. they've been better. we forget that. >> cvs a big move.
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2.5% on a flat day. two upgrades this morning raising rating to overweight saying there's hidden value in some of the media properties and less reliant on cyclical ad revenues. >> cbs is the winner in all categories and all demographics but not recently. >> you know who is number one now, baby. we went from fourth to first. it's amazing. >> nbc has. cbs to this point, we'll see how it plays out over the full year, of course. they do have many other businesses than you might expect. what's really interesting about what's going on in television right now, if my numbers are correct, 56% of people who watch live tv a year ago is down to 42% now. only 42% of viewers at any one time are watching a live program. most -- >> i'm surprised it's that high even. >> many are using video on
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demand and of course their dvrs as well. that's an evolving issue for that industry. >> why do advertisers love it as much as ever? >> you can still aggregate an audience beyond most others. not completely. >> one of the things i find again to come back to netflix, netflix is a way to be able to -- it's a cultural phenomenon as is dvring. when i look at the cbs call and i look at disney, disney's espn, no one talks about time shifting espn. it's too risky to time shift a giant. it's too risky. >> they could have time shifted last night's giants game. >> maybe back to san francisco weekend somehow. >> it's an argument. we deliver super bowl every day
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with 900 million users around the world. we have results now. 350,000 shares being sold. >> i think that when you see the big facebook cliff, we'll see what happens. i think that facebook does play a better role right now. i think people feel -- there was an amazing article about google yesterday. what it said is you have to pay more to google and get less and that is a very risky strategy for google right now for facebook to say you don't have to pay as much and get more. this will be an ongoing war between these two. maybe aided by the fdc, which is going to come down hard on google. i think it is. >> let's get to bob pisani on the floor watching what's moving today. good monday morning to you, bob. >> good morning. happy monday morning. three issues for the market. could china leadership change? numbers have been better in china. a lot of people betting that there will be large scale development programs coming in after the new leadership settles in. then we have the greek
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parliamentary vote. they are voting tomorrow on whether or not to implement some of these new austerity plans selling some industries, opening up the labor market. betting is that will happen. thursday they will release their report and betting is they will release the money. 3 is billion euros although probably in an escrow account. that's number two. third one of course is u.s. election. this is where some of the problems is. have you noticed german bonds today moving on the upside rather aggressively. u.s. bonds moving on the upside. that's all this stalemate concerns out here. that's all i heard this morning. that's all i heard over the weekend. the likely outcome is a stalemate no matter who wins on the fiscal cliff. obama will have to compromise. romney will have to compromise. what's the best hope for the industry and business right now? best hope is a last-minute deal to postpone tax cuts for yet another year, which could in fact go into the first quarter of negotiations. some of the people are more optimistic it will happen before that. some are not.
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that's why we get bonds moving to the upside right now. jim, i noticed that you mentioned the deal this morning with kbw. it's a symptom of what's going on in the friday overall. this was the big topic of the day. those who didn't hear, they are buying kbw for no premium. we're talking 6% premium. the stock was 16. offering 17 and change. that's no premium out there. that has got a lot of people talking about how the industry, the overall financial services industry is shrinking. kbw does financial research. helps with ipo and financial services area. 500 employees being bought which is a standard brokerage firm. traditional brokerage firm. it says the only way boutique firms and even mid size firms can grow anymore is by selling
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themselves. that's a very bad statement on how the overall industry is going. kbw's business right now, advisory and financial services, that business isn't doing good. when you see the volumes down here at the levels we keep talking about, that's a real drag on a company like that. this is small potatoes in terms of the industry shrinking. we had ubs laying off 10,000 people a week and a half ago particularly in the fixed income division. they're going back to global wealth management. old fashioned businesses. that's what happened to a lot of people in these industries. they are all starting to shrink back down. hopefully we'll reach some kind of level fairly soon. that's the hot topic down here today. >> agree. this is what i'm fixated on. i used to trade with a powerhouse and to get no premium. let's shift the bonds on dollar.
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rick santelli is at the cme group in chicago. >> thank you. we continue to see interest rates on the safe harbor type fixed income markets, euro and the treasury of course in the u.s. if you look at the chart you can see we're down four or five bases points. one-month chart these are three-week low yields. if we flip it to the currency side we see the intraday of the euro. we saw a sell-off coming into our time zone. that makes sense. issues of greece and spain. new unemployment figures. if we look at dollar versus yen. we see the dollar is moving lower. this is unusual. if you look at a two-month chart, clearly you can see we are still hovering at the best level since june on the dollar/yen. that relationship continues to be the bright spot that helps propel the dollar index higher along with the close to two-month lows on the euro side
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as we continue to debate all of the issues and many issues we debated many times before like are we going to cut new checks to greece. we have the nonmanufacturing ism coming out in about 20 minutes and of course the service sector. the largest swat to the economy is important to pay attention to. back to you. >> let's check out latest news in energy and metals. gold. go to sharon epperson at the nimax. >> we are looking at commodity traders here talking about the presidential election of course that's top of mind. they are also very focused on thursday because thursday we could see potential change in china's leadership. we also have the bank of england policy meeting and the ecb meeting. it will be a very important day. we're watching what is happening in terms of the oil price as traders try to assess u.s. energy demand in the wake of sandy and that is a key component here for the oil trade. precious metals are higher as well. in terms of energy, look at the gasoline futures chart and over the next several months you'll notice that the chart has a
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premium for contract in the front month. it's been that way since the summer. that has led to lean inventoriis because it doesn't pay to store fuel and that's why we look at the new york area having had the lowest levels of gasoline inventories on record ahead of hurricane sandy and as you know, we're still working through those issues and continuing to watch the price action there. copper, of course, the global growth story is really in the copper trade and there you see copper at a two-month low. that lets you know there's a great deal of uncertainty about what will come out of china this week and of course a great deal of uncertainty about what lies ahead tomorrow for the election. so that is really a commodity to watch in terms of where the uncertainty lies and the risk on, risk off trade. back to you. >> thanks very much. coke president has a tough thing to pull off if you don't get that level of cooperation that you're looking for. that's been the case at morgan stanley for some time after its
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ceo james gorman named the co-presidents of the company. today we have a resolution to what many have acknowledged was something that wasn't working as well as what had been hoped when mr. taubman announced he would be leaving there. a personal friend. he's been a telecom banker for many years. moved slowly up the chain. one of the largest individual employee investors at morgan stanley. over a million shares of the stock. and has been quite successful. at the end of the day, tkellehe will take over. they are trying to figure out a
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way to get return on equity up in a very constrained time for these financial institution when it comes to recognizing a return on equity. that goes back to can we manage the business better. we're dealing with the restrictions in terms of capital requirements. we're going to be dealing with new things from dodd-frank. what do we have to do to get that number up there. in addition to containing compensation. he was offered another job within the firm but chose instead to step aside. >> sounds so much -- when i was listening to you, the morer --s this something happening to the old days to the guys that say let's go have a drink and do some trading? >> it might be. i don't know if there's a trend there. it's interesting.
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when you do ceos and complex derivatives, you don't want a backslapper in there. you need a rocket scientist. remember that scene in "margin call." we need a rocket science. i was actually an m.i.t. rocket scientists. >> not to take anything away but -- >> i think a different model may require someone who is able to be more client focused. >> morgan stanley needs to put together three state quarters of showing they can run a fixed income business that generates a real return. we'll see whether that's the case. we should point out that you'll hear plenty of things about succession. let's not even get in there. greg flemming runs asset wealth management in that conversation. gorman is not going anywhere from what i hear. >> your point about -- it's not just morgan stanley but this bank in particular has had to
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make repeated decisions on succession based on a directional choice of culture, right? >> yes. >> going back to morgan and mac. >> one wonders when it comes to fixed income, i talked about this last week. the decision at ubs. they made plenty of bad decisions. we'll see how this plays out. to go fully to wealth management and say fixed income we're out of here. i do still wonder whether this will have an impact on other firms including morgan stanleys of the world. we'll see. >> huge. >> very, very talented. we'll see what they choose to do with his future. >> makes me feel really old. april still in. 30-year career on wall street. >> you probably don't have to work again. >> 30 years i've been? >> that's how long he's been? >> he can't help himself. >> coming up next, jack welch
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says we're in the first inning of a boom. hear what he has and hear his take straight ahead. and apple can avoid bear territory rising on ipad sales figures. is now the time to jump in? look at today's early movers here on wall street. if we want to improve our schools... ... what should we invest in?
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>> we have a chance in this country to make this be the american century. this gas thing is huge. the gas and oil that we have found is in the first inning. it's like the internet in 1990. we're in the first inning of a great american century unless we get whacked. >> jack welch on "squawk" this morning. an appearance that had a few memorable moments. warren buffett calling in. like the internet in the '90s. if we haven't done enough to
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promote that message, i'm not sure what we have to do. >> natural gas rig three weeks ago, i want to believe it. westport, which makes the engines says business is slow. clean energy fuels has not been able to build enough stations. they are shipping by gallons. waste management is the only company that embraced it because they are worried about particulate in inner city. tremendous shortfall a last week. it may be true, jack may be right. it's not happening now. >> we had an opportunity to be energy independent and outproduce saudi arabia when it comes to oil as a result of fracking. it's not just natural gas. oil is a global commodity. the natural gas stays here for the most part. >> north america. >> nat gas prices remain low. that's bad for the nat gas
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industry. could it lower costs so much that it spurs a boom in manufacturing once again and you have a renaissance in another way in terms of lowering the cost of businesses across the board and not just from nat gas industry. >> if i heard union pacific ordering the engines, you would get union pacific that are the largest diesel consumers. diesel you import oil. the trucks use a quarter of our imported oil. the pickens plan is clear about this. boone pickens will tell you it ain't happening. >> until they make it a true surface fuel, it ain't happening. >> the president says all postal vehicles by 2016 must run on natural gas. he has an executive order out there which allows him to dictate alternative fuels. this company is committeded et ethanol and to batteries. ethanol and batteries will be the most important because we're
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anti-carbon. president is anti-carbon. you can talk about natural gas. this is battery driven economy. it's battery driven. that's what they want. >> when we come back, is there any relief coming for that long gas line you might have waited on this morning? we'll go to the source and ask a station owner how his inventory is holding up. on the same page reading different paragraphs, we'll get a read with john engler. the name your price tool shows you a range of coverages, and you pick the price that works for you. great. whoa, whoa, jamie. watch where you point that thing. [ mocking ] "watch where you point that thing." you point yours, i point mine. okay, l-let's stay calm. [ all shouting ] put it down! be cool! everybody, just be cool! does it price better on the side? no, it just looks cooler.
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it's an important week and important 10:00 a.m. what's coming up, simon? >> we'll look at funding the recovery effort with senator mary landrieu joining us from louisiana in the next hour of "squawk on the street." we'll talk about apple and news they sold 3 million ipads in three days lifted the stock out of bear market territory. one analyst will tell us that you can still double your money
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in apple over the next year. we will also talk about the gas lines. back to you. >> thanks a lot. see you in a few moments. let's get to jim's six in 60. six stocks in 60 seconds. >> citi making a fall. >> employment could be coming back. it's a bullish call. this is payroll. >> adt if you listen on the radio. >> i believe that companies have stopped spending. continued theme of this quarter. >> another call on citi for nrg. >> energy is a big power merchant. lagged of late. they are electric car orientated. >> qualcomm. >> if this is true and they're going to guide up, that means that it is being docked quickly. >> call for morgan stanley. value in unh. >> a big stock supposed to do badly under obama but they have done well under obama. >> and finally biomarin. >> they help people walk and
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welcome back to "squawk on the street." rick santelli here. october institutes for supply management nonmanufacturing composite is due out. we are expecting 54.5. our last look. 54.2. hits the wire. 54.2. last month was 55.1. so a bit weaker than we were anticipating. the range for the year to give you an idea, strongest month was february at 57.3. the weakest month this year was in june at 52.1. so that slips in the middle. keep in mind that it is the best level going back to august at 53.7. back to you, carl. >> thanks so much, rick. see you in a bit. quickly look at market reaction.
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dow down 20 points previous. dipped lower ahead of the number. still down about 30. s&p is down three and some change. only nasdaq remains positive. interestingly a note today about the impact economically of sandy and how it might lend some more weight to things like sentiment indicators because it will be so noisy on all of the other data points over the next few weeks and months. >> a couple months before we get clean reads on the trend of the economy is what he says. >> our road map for the next hour, "squawk on the street" apple saying it sold 3 million ipads and ipads mini this is weekend. is it enough to reverse the steady slide in shares since that record in september? >> recovery from sandy continues. we'll talk about what it means for the election tomorrow with a woman who was front and center in the face of hurricane katrina, senator mary landrieu joins us next. apple sold 3 million ipads
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in the last three days but not all are ipad minis and shares of apple are near bear territory. you have a buy rating on the stock. brian, always good to see you. in terms of the release, the optics for apple in terms of interpreting news these days has been glass half full. when the release came out and they released a combined number and in other words ipad mini plus ipad sales, i almost felt like they were trying to hide something. was the number a good one? >> it's a great number because it is a doubling if you look at ipad mini and fourth generation from march numbers of wi-fi from third generation which was 1.5. this was not a wi-fi and cellular launch which we saw in march, this is wi-fi only. second thing is ipad mini is significantly supply constrai d
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constrained. 60% of the stores we contacted were sold out. >> at the same time isn't it important for you as an analyst to understand what exactly that mix is. it makes a big difference when it comes to margins. ipad mini is a different margin than the ipad. >> it's a good point. i would expect as ipad mini gets larger, that data will probably be released. it will get more color on the breakdown between ipad mini and regular ipad. eventually i think ipad mini will surpass the ipad market. >> all things digital. ihs, cost of the ipad mini, reversed engineered it. $188. retails for 329. how does that margin fit in historically with what apple built? >> the numbers that came out this morning were actually very favorable because apple came out and said gross margin profile of the mini is significantly below the corporate average. some of these studies were suggesting a 43% gross margin. we originally thought a high 30. after apple's remarks, i think
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investors thought it was significantly below. could be low 30s. that was a positive data point. >> as we saw with the iphone 4 and 4s, margins will increase because they mess around with how they get components in and put pressure on component manufacturers. >> exactly. when iphone 4 came out, it was a big hit to margin for two quarters and then it gave them a nice tail wind. in the 4s it was huge. margin profile didn't have to change. >> what's going on with the stock? it's now 1.1% lift on a day when markets are fairly flat. the prior couple of sessions, terrible sessions. on a day when technology led markets. apple was flat. on friday, apple closed session lows close to bear market territory. the stock is in steady decline since it hit all-time highs. what's going on in terms of optics? >> the news cycle when it turns
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negative and positive it overblows either way. i thought friday's reaction was very surprising. we learned there was an investment bank that helped apple shares that had blown up because of this. i think as those rumors get out on the market, people don't know if it's a big play or small play. nothing to do with ipad mini. our initial studies on friday said they are sold out of new york and we did it over the weekend and it sold out at most of the stores. that type of concern weighed on the stock. you had scott leave. gross morning an commentary with earnings. were gross margins too conservative? over a cycle they will be conservative on gross margins. >> it may not be a ipad mini but how many iphone 5s have they sold. where are you on the quarter? what do you think apple will be with the fourth quarter in terms of iphones? >> the demand is probably 50 million but we're modeling 39 million.
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>> because of supply constrai s constraints? >> we went to taiwan and china in october and we came back. that 50 million number that you think about is closer to mid 30s and we adjusted it to 39 million. ipad mini is same thing. i think they can sell well over 10 million. we model 7 million because i don't think supply is there. it's a supply issue. >> you have an astounding price target. it's almost double where we are now. 90% higher. what is the rest of the market missing do you think when we see this correction that we've had over the last couple of weeks since the september high? >> i think again when the news cycle turns negative, all of the fears that everyone has had over apple over the past few years comes to find. this he get marginalized in the iphone market. they get marginalized in tablet market. they were ramping down ahead of the ramp up. they have a closed ecosystem and android is open.
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they are guiding down in gross margin. 80% of the revenue comes from new products in december quarter unprecedented. second thing is they are starting expectations very low. we have the uptick in margins over the next two years. we saw it in ipad 4 and then we saw them rise. we'll see the same thing with this cycle of new products and not just iphones. >> is there something waiting in the wings for you to get to 1111? is that television? is that a 2013 story? >> we could see something over the next year. it's been on and off. it's starting to ramp and then it's not. so obviously they are in negotiation with cable temperature companies. that's a big issue. if the cap wasn't so big -- that's the fear the market cap is so big. it shouldn't really matter. they are decimating competitors and that market cap is coming under apple. it's an 86% over seven years.
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this year alone fiscal '12 was 60%. a stock trades at 8.5 times x cash. dividends will continue to grow. it could be an interest to a growth investment. >> the hurt in the street column in the journal today makes a lot of the 10k finding on wednesday looking double capital expenditure in september and that decreases in 2013. why suddenly are you hitting a wall on capital expenditure and what does that tell us about the future when apple doesn't guide as we might like it to? >> some of the cap x will hit ahead of iphone 5 and ipad mini launch. you invested in that in august or september time frame. other things is just the number of retail stores you're going to open. those are really the two drivers. i wouldn't read too much into that. apple is not going to grow 86% a year in the future. i think it's a company that you look over five years is a 20% to
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30% growth company. market share is still tiny in markets that matter. iphone, macs and tablets is a new market but they dominate so it's different. >> good to speak with you. now to recovery from sandy which is still in focus as we countdown to tomorrow's election. senator mary landrieu is with us now. she led her state's recovery after katrina. senator, welcome. good to have you on the program. >> thank you, carl. >> let's start a question on behalf of those who are among the most severely affected because it's always hard for fema to get universal good reviews after a disaster. we have seen signs that say fema, where are you in staten island? how much of that is deserved at this point. >> i'm in new orleans. i can tell you the people of new orleans and gulf coast and our thoughts and prayers are with the people of the east coast particularly in new york and new jersey and connecticut. fema is not a perfect agency by any means. they are going to have a lot of
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bumps in the roads. they are much better agency than showed up here for katrina. and the federal government both this president and the congress and i was a part of leading the team to help create a stronger, more robust fema. it's not perfect. i might want to add that it's much better. it's not the only central agency that has to show up. agriculture has to show up. energy has to show up. hud has to show up. and unfortunately, carl, just a few months ago the republican leadership in congress stripped all of the money out of those accounts and left only money in fema. thank goodness there is money in fema. it was a really unfortunate move. >> a lot of discussion about that over the past few days. one discussion that keeps coming up now, senator, is the degree to which the jersey shore, lower manhattan, are going to have to do big engineering infrastructure projects sort of like the levees had to be redone in new orleans. what are you hearing on that front?
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>> i think absolutely. i haven't yet had a conversation personally with mayor bloomberg but i intend to and of course with corey booker and some of the other great leaders in the region. my brother and i have already talked about this and want to offer all of the support. he's the mayor of new orleans. helped to lead the effort as well. we have to invest in infrastructure to help them particularly our water infrastructure, which is woefully underfunded for the whole country. people would be shocked to know that the core of engineers spends only $1.6 billion in new projects across the country every year. we already have a $40 billion backlog. we talk about one deficit, which is the deficit in the general fund. what we need to focus on as a nation is deficit and infrastructure. you see it play out in realtime in horrific detail in new york. i have been a strong supporter of water infrastructure projects. we're playing catchup down on the gulf coast and we'll help the people of the east coast get
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caught up with investments that should have been made actually years ago. and the money will come back to us ten-fold. the economic loss to new york and to our country is going to far exceed what the investment smartwise investments over time would give us. >> in the meantime, senator, we have many thousands of people who are now homeless and we have a storm, another storm that is approaching the east coast. what should the authorities do with all of those people? do you have from your experience any advice. it's a very, very difficult situation to know where to put them. >> it's a very difficult situation. as you know the whole nation rallied to support over a million people that were homeless in the gulf coast at least temporarily and some of their homelessness lasted months. we know how difficult it is and of course our area is not as populated as the northeast so their situation is going to be even more difficult.
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i'm sure local officials are scrambling and doing everything they can there's no substitute for a strong and muscular government in times of an emergency like this and that's what we're seeing. they have good leadership up there and they're going to need it. >> over the weekend "the new york times" unveiled various ideas about how you might protect lower manhattan from another big surge of 14 feet or more. some of it involves putting marshes further out into the water. others are more forms of concrete that would act as a sea wall. is there consensus building as to what this is supposed to look like in the end? >> let me give you great news. the dutch helped to found the city of new york and celebrated 400 years. i was just there for that great celebration. let me tell my friends in new york. nobody knows how to do this better than the dutch. that's where i led delegations. i led four delegations to the netherlands to find out how they
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managed to keep their people's feet dry. they do. they have virtually no insurance. the government builds extraordinary with help of communities both local and federal a wonderful water structure. they invest in it. it comes back to their taxpayers ten-fold. so you don't have to go very far. your original friends, the dutch, can help you. i'm sure they are already on the job. the scientists know, engineers know, but the federal government has been very slow to fund these projects. senator feinstein and i literally had a conversation by phone about this a week before sandy hit. she's the chairman of the committee. i serve on it. she and i were getting ready to kind of rally the congress to really focus on the importance of water infrastructure for the nation. i'm sorry that sandy has now made it very clear to many people that we need to do that. >> senator, i know the netherlands extremely well and of course the netherlands much of it is below sea level. that's the nature of it.
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they have now actually drawn up plans to determine which part of the country is allowed to flood when because the situation is so bad with the rise in the sea levels. do we need to have a conversation about climate change rather than just dealing with the effects of climate change in this country? >> that's a very important point. yes. we do need to acknowledge that climate change is happening and deal with it and not put our heads in the sand. there are different ways about dealing with it. even without the rising sea levels, places like new york are right now as you can see very vulnerable. without rising sea levels, louisiana is vulnerable. but that doesn't mean that we have to be frightened or fearful. the engineers and scientists can help us. we are learning that here. it take investment. it can come back to us 100-fold. that's what i'll work on this congress along with supplemental appropriations bill along with people in the northeast will
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desperately need. how much and how it is shaped i'm working with senators in that region as we speak. this is a long road for the northeast. if you stick with it, you'll build a stronger, better jersey shore, a better lower manhattan. it's going to take some time but right now people have to get shelter. get water. stay warm. and be able to get to work and get back to school are some of the more basic things that people need. >> senator, can't help noticing that saints helmet behind you as well. good luck to them tonight. you have eagles fans up here too. senator mary landrieu in new orleans. >> let's get a market flash back at hq. >> good morning, simon. stifel financial is buying kbw paying 17.50 a share. still needs to be approved by kbw shareholders but seeing both
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stocks higher today. s stifel is up 1%. we're talking to a gas station owner about how long the lines might last. and controversy over sandy's name and why it is called a hurricane or not could mean a huge amount for you if you've been flooded because your policy will have a higher deductible. we'll talk to the man in charge of insurance claims in just a moment.
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early estimates are putting sandy as one of the costliest disasters in united states history but whether it is classified as a hurricane will make a difference to homeowners and insurers. >> the reason being of course a hurricane deductible is higher than the standard. a hurricane deductible 1% to 5% of a structure's value. given that sandy wasn't a hurricane when it hit, most policy owners will be on the hook for the lower standard deductible. early estimates put sandy among the costliest u.s. catastrophes
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with forecasts of 10 billion and 20 billion of insured losses making it one of the five costliest disasters in u.s. industry on an insured basis. official tallies are months away but how soon the power griand transportation grids are back to normal will affect that. as for firms covering claims with 500 billion in capital, the insurance industries has funds to pay for them as premiums increased last year and declining catastrophe claims upped their financial profile. it may help insurers later. in the current quarter, morgan stanley saw sandy cutting earnings by 26% while deutsche banks expect those with big exposure to hard hit states of new york, new jersey and pennsylvania to see shareholders equity cut by 2% because of the storm. now among the major insurers,
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they say it too early to tell. no comment on potential losses for now. they have expanded across the northeast to reach clients. state farm says they have received 63,000 homeowners claim and 12,000 auto claims. most of the damage is caused by flooding. it will put strains on the federal program which is alive in large part because of a life line thrown to it by the u.s. treasury. >> good information. thanks so much. mary thompson at headquarters. pain at the pump. a week after sandy, long gasoline lines persist and a lot of these storms stricken areas. we know motorists are getting aggravated. how are gas station owners coping? one will tell us his side of the story in just a few minutes. in america today we're running out of a vital resource we need
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty.
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here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. 50% on banners. commodities could really shift on any events this week. sharon epperson joins us now
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with a preview of where we are likely to trade. >> we're seeing that across the board. a great deal of uncertainty and mixed picture across many commodities. gold prices with a bit of a bid. they lost $125 in the past nine weeks. industrial commodities are really getting hit because there is this uncertainty particularly about what will happen in china. here in the u.s. we're reassessing what's happening with hurricane sandy and how that's going to impact u.s. oil prices but brent crude is oil and copper prices are at a two-month low. i want to bring in eric who is an independent copper trader here on the floor for nearly 30 years. we have seen a great deal of malaise. what is pressuring copper at the moment. >> we saw a run-up in mid september and everybody got on board waiting for the next big push. after that when it didn't materialize, we had quite a bit of sell-off ever since then.
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now we have supply issue in which we built up stocks lately and with uncertainty in two big elections in largest world economy, people head toward the sidelines. >> everybody is focused on the u.s. election. you say that china -- what happens on thursday there could be a really big event for the copper market. >> for europe that's been in headlines for quite a long time. they don't use that much copper and their economy is in recession for a while. much like the united states market where the housing market has not recovered. we hit bottom at best. the world driver for copper prices has been china. we have seen infrastructure prices bid in for the stimulus packages but when the new regime does, we don't know. will they add to infrastructure. will they do fiscal stimulus. we don't know how they'll stimulate their economy when the new regime comes in.
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it's uncertain for copper. >> what do you say? how low could copper go here ahead of thursday? >> we've had a big sell-off $4 almost down to the low 340s. we should hit good support from back in august in low 340s. if we penetrate there, maybe mid 330s. >> we do see a bid in precious metals today. is it just that they have fallen so far so fast and we're seeing steadying or do you see a real difference here in terms of risk on and risk off trade? >> i think you have seen 30 or 40 move on friday and a sell-off in silver. i think you have more of a dead cat bounce where the copper really hasn't had the significant sell-off nor had a good support level yet. >> there you have it. thank you very much. copper trader on the floor. this is the global commodity to watch in terms of where we're headed here and china is a big point here for this week.
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back to you. >> what a week those traders have in front of them. thank you so much. sharon epperson. coming up next, election and money as we head for the campaign finish line. we'll set down with romney's adviser. >> a gas shortage now a major issue for many areas along the northeast. is there any relief in sight? the corner of one service center located in the heart of central new jersey will join us. he ran out this morning. bob, th. they're... optimistic. productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.
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one hour into trading. 7:32 on west coast. 10:32 on wall street. the institute for supply management nonmanufacturing index for october coming in weaker than expected falling almost a full point to 54.2 but the reading is still above 50. market services sector expands to 34 consecutive month. shares of toyota rising more than 32% raising full-year guidance after profits triple in the third quarter and realogy shares grow up 42% since going public just last month. mitt romney and president obama making their final push before election day. governor romney attending rallies in crucial swing states.
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kevin is an economic adviser to the romney campaign and director of economic policy studies. good morning. glad to have you. >> good morning. >> a lot of talk about what happened to the stock market on friday. closed down 139 points. some blame that on worries about no matter who wins, fed policy changes. the romney campaign has been a little opaque on their view on whether or not bernanke would stay or go. can you bring any clarity to that? >> i think that governor romney said that he would like to have a new vision at the fed. i think that's been pretty clear. i agree that it was a weird day on friday. the jobs report was a little bit mixed with unemployment rate going the other way. the fact is that gdp has grown above 1% right now and we have the fiscal cliff coming so there's reason for the market to be nervous heading into the new year. >> do you think under a romney administration, bernanke would finish out his term? no question about that?
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>> that i'm not sure of. i think that governor romney has talked about a new vision at the fed. i would guess that bernanke would serve out his term but it's not something that i've been privy to discussions of. >> you mentioned the fiscal cliff. john boehner was quoted as saying the temporary fix is pretty much the best we could hope for no matter who wins. if governor romney wins, who is first phone call he makes relative to the fiscal cliff? >> i think governor romney has a long record of working with democrats. if there's good news for governor romney tomorrow night, he'll begin working with democrats right away. everybody knows that in washington nothing happens unless you work with the other side. i think that's why we've had gridlock for the last couple years and so for sure governor romney will be on the horn talking to democrats right away and talk about big things we need to do next year. we can turn this country around but it will require a lot of
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legislation and tax reform and things that governor romney has talked about on the campaign trail. one of the things he'll do is get together with democrats to start to plan next year. >> people will look for the word compromise diligently when it comes to fiscal cliff. how much leeway from an economic standpoint does the governor have in dealing with a house that's to the right. we'll see what happens with the senate. how much room are they going to give him even with paul ryan acting as a liaison? >> again, the first thing we have to do is get the fiscal cliff fixed. i think governor romney would like to extend everything for a year. if you look at fiscal policy history, when you have a president who leads, a president that negotiates with the other side and uses treasury staff to write a tax bill and then sends that bill up to congress and says, look, guys, this is the best we can do. no cherry picking. that's the history of successful presidential leadership. it's not something we've seen over the last four years and
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something you will see if governor romney is elected. he'll be compromising and negotiating and trying to get legislation done as he did in massachusetts. >> there was a suggestion that if president obama lost the election would veto any move on the fiscal cliff that didn't involve a higher rate of taxation on the wealthy people in the country. how do you work around that? how disruptive could that be? >> you know, i think there's been a lot of speculation about what president obama would really do. i think as you folks talk a lot about on the show, if we go over the fiscal cliff, cbo says that can toss us into recession. it seems that very unlikely that anybody would really play a game of chicken that would throw us into recession just out of spite for losing an election. >> we can hope. approval ratings of congress might lead you to believe otherwise. have those who work for the campaign advising on economic policy, had anything to say
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about the way the campaign has framed the jeep manufacturing issue? do they believe that this is a fair ad, a relevant ad? >> you know, there's been a lot of disinformation about governor romney's discussion of the automakers. one of the main talking points for president obama. i think that governor romney on the campaign trail in the last week or two has gone a good job of clarifying what he said all along about the bankruptcy. he recommended right at the beginning that they have a reorganization of the automakers that was the reorganization that they had and the notion that he was going to shut down the automakers is just false. i think that really the lack of clarity has come from the other side which has been accusing governor romney of saying things he just didn't say. even the fact checkers at "the washington post" have agreed with governor romney on this. >> whereyou be tomorrow night? >> i will be with a friend
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watching the returns. >> we'll see if it's a long night or not. a lot of people will be watching. thank you for insight the day before. >> extraordinary scenes continued over the weekend in the tri-state area. long, long gas lines becoming a common sight. efforts in the new jersey area to ration fuel to help the situation do not this morning appear to be working. let's bring in one station owner who actually ran out of gas for the public but still has some left, he says, for emergency workers. gary is vice president and co-owner of a service center located in central new jersey an hour of new york city. welcome to the program, sir. >> good morning. how are you? >> so what is the situation because when we spoke to you at the end of last week to set the interview up, everything was ticking quite nicely and we learn today that you actually ran out of supplies. >> correct.
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we have been out of petroleum since friday. we haven't received any. today is monday. we were providing fuel for emergency services, police, fire, and emergency personnel but we haven't received any. refineries can't get it out to us. we've made numerous calls. we've called office of emergency management. no one has been able to respond to get us fuel. at least of all to keep emergency people moving. >> we read in the press that the white house was accelerating the efforts at the federal level to assist guys like you specifically in new jersey. the pentagon was hiring trucks and they would take fuel where it was needed to service centers that would then deliver it to you. why is that not working on the ground for you at the moment? have you heard of federal involvement? >> yes. we have received e-mail from
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town hall from oem office saying the service would be provided from fema national emergency services but we have not seen any as of yet and somerset county and warren township hasn't received anything. we're all running on emergency generators as well as municipalities not having fuel either. >> in terms of the odd/even license plate fueling scheme that the governor has put in place in new jersey, has that eased the lines at all and are people's tempers remaining in check? >> we have no example if that's working or not for us here because we haven't had fuel. from what i understand from other areas and other municipalities, it has calmed the effect a little bit. as soon as the facilities don't have fuel, everybody is back into the same problem again. they don't have fuel. so odd or even is a moot point at this point. >> you have done this for a
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number of years. what's the lesson here we should learn in your view? >> well, 35 years in the petroleum business and 12 years in municipal government, it goes to show us that we're never prepared enough for this type of situation and this devastating of what's happened to us with this hurricane. >> if there was one thing we could do for the future, what would it be? >> i think for the most important is to continue which is really a big part of the municipalities is to continue office of emergency management to continue to support those programs that will keep people in homes with no heat, no electric, to keep them in shelters and provide more of those services so people have somewhere to go and for fuel i think they also need to continue to provide emergency trucking services and to have a backup
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for when these facilities and terminals break down. >> thank you for joining us on the program. a gas owner in new jersey. thank you. let's get to market flash. >> watching shares of mcgraw hill one of the worst performers on earnings. restructuring cost pressuring the bottom line. all of this as a decision on whether to spin-off the education arm is expected in the coming weeks. the stock down more than 5%. >> thank you. our very own phil lebeau becoming part of aviation history this weekend. we'll give us details next. >> tracking superstorm sandy's recovery efforts. we talked power and fuel already. what about food? how are major supermarket chains in the tri-state area coping in the wake of the storm? we'll talk it the president of fairway market in just a moment. [ male announcer ] this is joe woods' first day of work.
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it was a big weekend for united airlines and some aviation fans as they had the chance to be the first one on the first dreamliner flown by a u.s. airline starting with a toast from ceo of united airlines. >> united makes the first dreamliner flight yesterday with 219 passengers onboard from houston to chicago. u they have 50 on order over the next five years. they'll fly the dreamliner primarily on international routes like denver to tokyo, hu houston to nigeria and early report from customers on the flight, they loved it. >> it's a lot more open, more
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expansive. better lighting. very comfortable. >> airplane is incredibly smooth just on takeoff you can hear it now. you can't hear anything. it feels like you're on your couch. >> i can't believe how quiet this plane is from comfort from space is phenomenal. >> the folks at boeing are building 3.5 dreamliners per month but on schedule to build ten per month as they announced plans to do by the beginning of 2014. this is the latest backlog information. 33 have been delivered including the one we were on yesterday. 805 are on orders which mean they have backlog through 2019. and look at shares of boeing and united. shares of boeing up a little bit today and united along with other airlines are up hoping to recover a bit from last week and problems that were there because
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of hurricane sandy. one last note regarding flights, you know you're on a big and important flight when first thing you hear when you get on the plane is someone proclaiming from the back, i just used the dreamliner bathroom. first person in there. it's awesome. couldn't believe it. >> one and only. thank you, phil. phil lebeau in chicago. still ahead on the program, john engler will be with us. o what are big corporate leaders telling him about tomorrow's presidential election. rick santelli live from chicago. >> good morning. we can't wait to talk to mr. engler, former michigan governor. prior to that, top of the hour, we're going to talk about something very simple. it used to be a series and now it's serious business. who is the boss? i think the mid terms in 2010 gave us an idea that the people want to send the representation to washington but they want to
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be pro-active. will this election be any different? we'll talk about that top of the hour. [ male announcer ] research suggests cell health plays a key role throughout our lives. one a day men's 50+ is a complete multi-vitamin designed for men's health concerns as we age.
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one and a half million people remain without power as
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the impact of sandy comes to light. thousands flocking to grocery stores for food and water. fairway market is around the tri-state area. phil sanford is the president. good to have you with us. >> nice to be here. >> you have one store in particular that was hard hit in red hook, brooklyn. most of that area is under water. what can you tell us about the recovery operations there? >> we lost bill. >> we're having difficulty with bill's satellite. we'll try to get him back. he's back. bill? >> yes. >> there were five feet of water in the store. it was a complete loss. the food had to be destroyed and
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the equipment taken out. we are starting over. >> starting from scratch. any hesitation about starting over in that exact location? we are finding many businesses impacted by opening up in low lying areas. does it make you think twice? >> no. we love that store. the customers love it. it's an institution in the neighborhood. we'll re-open where we are. >> you're an institution in my neighborhood on the upper west side. any damage to the uptown store on 130th and what about getting goods? how difficult is it to get stuff to the stores these days? >> our business is all about people and logistics. the first thing we did was get our people where they needed to be. we carted people around in buss to the stores. we opened all three city stores until 4:00 p.m. on monday. then tuesday morning we had seven stores open by 10:00 a.m.
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our supply chain was working well. we have a flexible supply chain. we can switch vendor if a vendor is having trouble supplying a store. we were operational at ten stores besides red hook wednesday morning. >> you mentioned rebuilding red hook. do you wrestle with it at all? if not, does the storm mean you will do business differently in any way?
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>> we plan to use every kind of technology you can to keep the flooding from occurring the way it did. le in general, in their communities. we are a big part of the red hook community. 90% of employees are all still working at other stores. we have a bus in the parking lot every morn iing and get employe to other stores so they can keep drawing a check. we look for locations where our demographic works. if it's in red hook, we'll be there. same in harlem. our customers love us in their communities. we look for places like that. >> there are places outside of your control. we are hearing how jersey gas stationses are under pressure and supplies are drying up. how do you keep things running with gas shortages? >> we'll be flexible. we have creative employees. we have several hundred small suppliers getting trucks into
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manhattan and supplier stores. we'll see what happens with fuel shortages in new jersey. a lot of suppliers are based there. we operate our own fleet also. so we can pick up if we need to. >> last question, bill. does this delay your plans to go public? >> we are working on getting stores up, taking care of customers now. we seal' what happens in the next several weeks with the ipo. >> thanks, bill. >> apple sold 3 million ipads over the last few days. not all are minis. we'll dig into the numbers and what they mean ahead. from currency trading for a few
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what's coming up tonight? >> we have the ceo of xylem. they make pumps. we have rick rieder, are bonds the play if obama wins and stocks for romney? >> people looking for ideas. we'll see you tonight. simon, in a few minutes.
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here's what you might have missed. >> welcome to hour three. here's what's happening so far. >> if we are going to make this the american century we have to have a moon shot type thing to get energy out of the ground. we can't have lisa jackson deciding what the energy policy will be. >> we got a phone call from warren buffett who wants to speak with you. >> when those women came demand you were getting a nickel for black shoes and 25 cents for purple. >> i was able to have more drive and incentive. incentives drive behavior. >> if you at home want to be baffled and trade every minute, risk on, risk off. i can do it for you. i can trade it for you hourly if you want. i can bet an 18-1 shot, have it come in and take the over in the eagles game. it's not valuable. it does not help you. i'm saying if it's a swing state
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it goes to obama. >> others say independents skew to the challenger historically. >> i know. >> some of the polls may be skewed. >> so happy when we are no longer talking about this. i'm sorry. >> opening bell for monday, november 5. >> i have been a strong supporter of water infrastructure projects. we are playing catch-up in the gulf coast and we are going to help people of the east coast get caught up with investments that should have been made years ago. >> good morning. let's check on the markets where we really are on hold. look at the flat line on the dow, s&p. even on the nasdaq. not a lot of directional trade happening. as people wonder what will happen tomorrow night there are a few dealers.
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groupon trading higher on comments from itg saying domestic volume trends improved in the third quarter with a strong performance in september. time-warner cable, the biggest loser after third quarter innings were below estimates losing more video subscribers than projected. to the road map. election day is tomorrow. the results could have implications for the market. obama supporter michael branoff will join us live with his take on what tomorrow's results could mean. apple trading near bear market territory on the news it sold 3 million ipad this is weekend. is that a turning point for the stock? and john engler tells us what ceos are worried about and how the election could affect big business. and barclays's barry knapp is here to keep your money safe. that's job one. the candidates making final campaign pushes before tomorrow. the chief washington correspondent john harwood is at
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headquarters with a busy birthday week kicking off. good morning. >> thanks, carl. we have a very close race going down to the wire. both campaigns are cranking organizations. both candidates are racing around to battleground states. let's look at where the polls stand. you start with the national nbc news, wall street journal poll. barack obama with 48% of the vote. 47% for mitt romney. this is consistent with pretty much all the national polls. a one-point, even race. nobody's up by more than one point nationally in any of the surveys. then you look at the swing states. that's where barack obama held an advantage. let's look at the state of virginia. mitt romney is going there twice today. barack obama has a narrow one-point lead. 48-47. look at the state of florida. one that mitt romney is counting on as a lynchpin of the base. 29 electoral votes. president obama up among likely
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voters 49-47. in ohio, the state most look at as the potential tipping point. president obama has a six-point lead. he's gone hard on the auto bailout and hitting mitt romney. that's a point of contention. because ohio has been such a tough nut for the romney campaign to crack, that's a reason they are making a late play into pennsylvania. it depends on turnout organization, especially the composition of the electorate. what portion of white voters versus hispanics. definitely a lower level of intensity and young people. barack obama dominates among young people. mitt romney among seniors who are more motivated to vote. how much will that carry the day? we'll find out tomorrow. >> if you're looking for an early tell tomorrow, if you could only look at one state
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early on, virginia. if it's decisive either way does that suggest the rest of the night collapses in that direction? >> almost in any of the battleground states other than ohio which is an outlier goes in a substantial way for either candidate that's a tell. when you look at swing voters they don't look much different when you cross state boundaries. yes. if anybody wins virginia easily which i don't expect. it will be a long night counting votes. that would be a sign that things will break in a similar direction in colorado, in ohio, in florida as well. but most people think we are going to go deep into the night on the counting of votes. the swing states could tip the same way, but it will take a while to tabulate who comes out on top in each one. >> i was afraid of that. we'll see you later. let's get our capital markets up. a lot on your mind.
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you're talking election and other things. >> if you're one of the few undecided people out there that's going to make the decision in the next 24 hours based on what you think is happening on the job market, on friday there were 171,000 jobs created. remember, 75,000 of them were basically year over year, seasonal adjustments. many think they were created out of thin air. if you are going to make a decision based on the job market, don't forget these numbers. we were fortunate to use this op-ed last week to share what people were saying about the new york city marathon. i want to do it today but about other things. i want to show pictures. on long island where i live, i have pictures to share. those are live wires. this is seven days after a natural disaster. those are live wires.
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that's a tree on a building. this is america. that tree is leaning on that building. people have been evacuated. still not removed. what's the point? i have video. these are the gas lines. what i know and i have been told and i'm letting the viewers no. no matter your opinion about unions, you should understand when i went out and spoke to some disaster recovery people from the south, they were amazed when they were told some of the workers were nonunion and were sent back. i don't know if this is a fact. i'm not able to confirm it. but if lipa sent pack nonunion workers here to help then cuomo as the governor of the state and
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who is in charge better explain not just to me but to every person in this building how this is america 2012 and we are still living with this. i don't know what to tell you, carl. >> i saw the report, too. it raises some eyebrows. from every complaint about lack of service and recovery there has been a comment of some kind that it's amazing the new york city subway system is operating as well as it is. >> i would say new york city and i will give bloomberg credit. the outer boroughs haven't done any prepreparation. it's beyond my wildest imagination to think live wires can be around there. if lipa is watching because they are probably sitting in offices with power, please help people out. it is unsafe. thanks, carl. i'll be back with thoughts about
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the election and the market. don't miss it all the at the bottom of the hour. >> we need that. >> i will explain why at the bottom. >> let's go to jackie deangelis. >> hard to come after gary, but still. watching trans ocean now. it beat on the bottom line despite falling short on the top line. still, operating efficiency was key to the earnings beat. in fact, raymond james said they were cautious going in. looking for signs that rig can repeat that in the next quart. carl? >> thanks. let's go to rick santelli at the santelli exchange. what a week we have waiting for us this week, rick. >> absolutely. i'll tell you what. tomorrow can't come too quickly.
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not only for what we do but for the country. there are things on hold that need to be in proactive mode. prior to the crisis in 2008, the country and the populous and everybody that goes out to that i can their greatest responsibility and vote every year, every couple of years, that's a big responsibility. something happened in 2008. you know, people go with the current. you have an election, wake up the next day with continuity. 2008 was a crisis. the water turned from a steady current into white water rapids. all of the sudden we find ourself, to many, on a course that isn't exactly where the current was leading them before the crisis. that's why the 2010 midterms were a large factor in change
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with respect to the government. i don't think tomorrow will be any less large in terms of results. i do think people want to be proactive when the current of the country doesn't match the direction they want to country to go. in the end, who is the boss really is the people that are casting votes behind curtains, starting tomorrow, going into the evening. we have heard about flip-flopping. compromise. remember, everything changes after tomorrow. here you have the world of compromise. here you have flip-flopping. what are the definitions? compromise, everybody gets together. give and take. flip-flopping is similar. a change in attitude or direction. here is where they intersect. everything will change upon that intersection. we'll talk to governor engler about the same dynamic. in the end whatever you believe
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in, we realize the country needs compromise of the highest order. >> break out the venn die grachlt when we come back, the ipad mini has a week of sales under their belt. is it a success? the stock has been troubled. ♪ ♪
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after wandering near bear territory, apple is moving up. what does the number of the new ipad number mean and is now the time to buy? senior analyst of piper jeffrey joins us. good morning. >> gromplt. >> you said on friday they would announce on monday. of the 3 million, what do we know about the mini? >> the number was better. probably two to two and a half million. probably closer to two and a half. when we surveyed people in the lines on friday, 95% were buying the mini. they doubled what we were expecting for the ipad mini which is important. there are a lot of nay sayers about apple's ability to charge $330 for this and get people to show up and buy it and the fact that they did double the
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expectations despite the higher priced product, double what the market is, i think, is a good sign that people want their products. >> yeah. of course they don't break it out. how do you get to the two, two and a half? >> it's basically, we went when we did surveys. we went to lines in minneapolis and new york. three different stores. 95% of the people in the lines were for the ipad mini. we assume that the online sales would be similar. the mix would be similar. if you assume 83% of the people bought ipad minis again. our survey shows 95%. temper it to 83 suggests two and a half million. >> interesting. okay. you're comfortable with making some of the assumptions. supply constraints. how big of a story is that on the mini side? >> well, the numbers are smaller than versus talking about the iphone issues.
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one critical point is the margins appear to be better than indicated on their last conference call. i suggested 43% margins comparing to 39. there are doomsday margin guidelines apple gave. if you look at the materials, things may be better than what they hinted to on the last earnings call. >> all leading us to the final question of what to do about the stock. in the premarket it came within, i think, one and a half percentage points of 20% correction from the 705 number. do you think that accounts for the buying and how comfortable are you with the target? >> we are comfortable. the big question is the margin on some of the products are better. that's the investor. higher asps.
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people are buying the products. we would be a buyer of apple here. >> it appear it is weekend went okay. we'll see what the holidays bring. thanks, gene. >> thank you. >> it is the one issue the corner offices around the country agree on. the president of the business roundtable john engler joins us to tell us why ceos want quick action when it comes to the deficit. that's next. if you think running a restaurant is hard, try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase.
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well, if it isn't mr. margin.
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mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.
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rick santelli is in chicago to talk to the president of the business roundtable, john eng r engler. rick? >> welcome, john engler. former governor of michigan. the best place to start, governor is -- is simpson bowles still a good idea? do you believe in it?
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did you believe in it from the beginning and health care isn't a part of it and does that make a difference? >> yes, i believe in it. yes, it was a good idea from the start. yes, it should have had more support from the beginning. as far as going forward, hopefully 48 hours from now we could get started on it. the only thing simpson bowles is lacking is adequate detail on what we are going to do about health care entitlements and how we'll do the tax restructuring. we need comprehensive tax reform urgently as a nation. our system is outmoded and not competitive globally today. >> you arrived at my second question. we all understand the reason simpson-bowles is back in the water cooler vernacular is because of the fiscal cliff and how to solve it and the long term structural changes that need to be made. so no matter what happens tomorrow although it can have an
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effect on the fiscal cliff are we going to have a long time addressing those issues or will it come together easy? i can't imagine just tackling the tax code won't be a major undertaking. thoughts? >> that's like the fiscal everest that has to be climbed. the fiscal cliff ought to be easy. after the election is over it would seem like you would give a new president, let's say time to put together a comprehensive plan. if it's 're-elected president maybe less time. but we have heard a lot of talk. the fiscal cliff short term is extend the tax rates, back away from defense cuts on sequestration and don't fool around with the debt ceiling. do russian pntr while we're at it. that's a good job for the lame duck. in 2013 the new congress sits down to deal with what we haven't dealt with for years. that's long term entitlement reform, a comprehensive rewrite
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of the tax code. git the tax code permanent, rick. 60 provisions expired last year. 41 more major proigs haves this year. we don't have a tax code in the country that's rational any longer. it sure isn't competitive. >> you hit on the big point, the timing factor. you were succeeded by ms. granholm. i read her book. she seemed confused why republicans want to lower taxes to create jobs and went through a litany of tax credit programs she had under her tenure. credits don't work. it's long-term very predictable rules moving forward. >> right. >> how long does it take to get there? >> it has to be done, in my judgment in the first six months of 2013. we have talked with chairman camp, chairman backus. now it's not just corporate and business tax rates but so many
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individual provisions are also up for debate. one thing that's been unhelpful with the campaign is some of the rhetoric that says, we'll burn the house down if you don't give us what we want on taxing high net worth individuals, ignoring that also taxes a lot of the job creating small, medium business enterprises. we've got to have everybody come to the table with a willingness to work it out. i think if there is a big global deal, a lot of things are possible. i think the hardest part is not the tax side. it's on entitlement reform. i think there are big questions whether the current health care delivery system is up to the task of managing in a constrained world. there will have to be some reductions. you have to raise the age for sure, it seems, in terms of medicare eligibility. and social security. you're going to have to do a number of things that other countries didn't do. when you watch it play out in
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europe, we sure don't want that to be our future. we can lead the global economic recovery if we are smart and we act. >> one final question. when it comes to health care, tort reform was never an issue. just as the last quick question. do you believe we can't possibly have health care reform unless we tackle the legal side of health care and the costs doctors have to pay for malpractice insurance? >> there is no question there is a huge toll the american health care consumer pays for the practice of defense of medicine. there ought to be ways to modernize. as state governors many of us tackled tort reforms and stopped the exodus of health care professionals including skilled specialty doctors and general practice physicians out of the states but it needs to be done out of the national level. we are litigating too much. everyone is tired of political commercials. i'm tired of the lawyers advertising about any ailment i should call the 800 number
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because no doubt somebody did something wrong. >> that's a great place to end it. i completely agree. thanks for being with us today. so much may change tomorrow. hopefully you will come back to talk about the new landscape. >> you got it started. we'll see what happens tomorrow. >> nice shoutout from the governor, rick. thanks so much. a few minutes left in europe's trading day. we'll get the close and the details and impact. going to be a heck of a week. so anyway, i've been to a lot of places. you know, i've helped a lot of people save a lot of money. but today...( sfx: loud noise of large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep? (sfx: loud thud sound) what a strange place. geico®. fifteen minutes could save you fifteen percent or more on car insurance.
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just about the time on wednesday when we are digesting the vote from this country we have another on our hands in europe. >> absolutely. a huge week here in the united states with the election, but also a critical vote coming through in greece by the parliament on wednesday. for the most, notice we are in slight negative territory around europe. particularly booking profits where we have had the gains. there was a strike by transport workers so some of the cab drivers weren't focusing and the subway. that's now a 48-hour general strike climaxing when the parliament has to vote through 13 and a half billion euros of further aus the ter ti cuts. deutsche bank says it could go
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through. if it wasn't we will have a problem. that means they won't get money from the rest of europe. that's what we are watching for wednesday. corporate news. hsbc holdings suggested it may face criminal charges on money laundering allegations and the $1.5 billion it put aside for fines may not be enough. big fines expected there. do you remember ups buying tnt express. you can see how the stock rocked higher. on friday the competition commissioner said they wanted significant concessions for those two sides to get together. the 30% shareholder in tnt express said as a result of losing $180 million on the value
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of the big investment it may not pay a dividend. you can see how the stock lost there and mail services under pressure in the netherlands. ups holding firm. one good news today. seems like europeans started traveling again after the olympics. that boosted the largest budget airline in europe. ryanair says fares are higher. fuel costs dipped because the price of oil has moved down. ryanair doing well. you can see we have come back down there. just waiting. an election here. voting in fwrooes ond wednesday and the chinese with regime change. >> don't forget. bank of england, ecb thursday. chock full of events. let's get a capital markets on-ed. gary is talking about what to expect with regard to the markets after the election.
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>> we'll get to that in second. my desk was commandeered. i wish these kids would go back to school. listen. if you remember, bring up the s & p. let's go back to august first. we did an informal survey but got the pulse of what people thought was the big driving factor for s&p in early august for the rest of the year. 69%, a nonsfi poll but a good pulse of people running money. 65% felt the election would be the determining factor for the rest of the year's movement for equity markets. if you look at the s&p it's interesting. you had the big qe rally where give or take 20 points, almost where we were in the mid august time frame. why do i bring it up? there is a huge expectation in terms of the bets made on both sides. what will happen with the u.s. equity markets come wednesday? carl, you know last week we had
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a good sense talking to people who felt we would fade every afternoon. the real opinion right now, the best that i can tell is if you are expecting movement up or down next week and later this week you will be disappointed. in fact, i wouldn't be surprise fd the s&p was essentially up or down a couple of points today or tomorrow. right there on wednesday, thursday, friday. many factors that have been made, the big bets on either side of the election, sort of what we think will happen and whether or not the bets will play out, they have been made. many people aren't going to unwind them. good investing is to keep the winners, sell the losers. but most people don't practice that. the sense i'm getting is the loser bets whatever the bets are, aren't going to be unwound wednesday, thursday and friday. in fact, we know this election may not be decided tuesday night, wednesday morning. if you expect a lot of movement this week or next, i'm afraid you will be disappointed. >> that's interesting.
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>> we'll come back if we have time at the end for advice for people who haven't made bets yet. good stuff. meantime bob made his way to post nine where, again, it is a lot of political noise. >> oh, boy. this is a tough one to read. if you look at the markets it's fairly flat here. even on the advanced decline line. in terms of sector standouts not a lot. people reading into the tea leaves of the stock market are out in force. i'll give you an example of the political commentary. utilities, reits and telecom are weak. they are the big pay outs for dividend. some people argue an obama victory may look more likely he ease negative for defensive kennedy payer because he would raise taxes on dividends. utilities have been bouncing
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around because of sandy. but they point to to weakness on drug stocks. some of the big drug names that pay over 3% and the drugs have been dividend payers. if you look at merck, johnson & johnson. lilly has been positive. all of these are 3% payers on the week side. this is what i'm dealing with. unsarnt is the problem now. the theory about a post election bounce is neither president obama nor romney would spare the need for a compromise on the fiscal cliff. both will have to coa compromise. so post election neither party will risk a recession. this is the argument of the bulls. the likely trajectory, this again is a bull argument, that the tax cuts will be extended for another year.
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that will be bullish for the market. we'll see a rise afterward. people point to the fact that we don't need a resolution for the market. germany last year. if you will notice what happened, the bottom in europe was in october and november. that was before we got commentary about a resolution and where we were going. that was well before december, 2011 when the ecb came and helped with lower rates. we didn't get it until here. the bulls are pointing out you could get a bottom before you get a resolution to the fiscal cliff. finally, the worst case scenario, the thing nobody wants is the year 2000 again. that was when there was -- weeks before there was a resolution to this. year 2000, the s&p 500. remember? hanging chads? al gore? six weeks before we got a decision. this is what happened to the stock market. people don't want to remember. i was here on the floor. it was ugly. the stock market dropped 10% between the election and the second, third week of december before we got resolution.
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heaven forbid. that's the worst case scenario. >> thanks for the memory, bob. >> i was here. >> let's get a market flash. jackie? >> healthnet shares are are making a big move up more than 10%. after third quarter numbers came out, this is a company trying to overcome issues like high costs weighing on the first half results. the cfo saying the company is making significant progress and preparing for what they believe will be a better 2013. the stock seeing a pop today. >> thank you very much. as bob said e we are entering a week of risk and uncertainty. the presidential election a day away. how can the result affect your portfolio? barry knapp is here from barclays. good morning. >> good morning. >> i'm looking at a report from a competitor asking if a romney victory is positive for stocks. you must have a view on that. >> i do have a view on that.
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i think not having read the report i would agree. i do think the number one issue, if you look at what's going on in the macro economy, the housing is getting better. consumption is stable at the the moribund rate. but the real weak spot is capital spending. that relates to the hit in business confidence both small and large. it reminds me, bob was doing history around 2000. i like the year 1948 when truman ran with a similar campaign platform as barack obama. he won a shock election and capital spending went from 10% of gdp where it is now down to 9. it drove us into a shallow recession on the basis of capital spending imploding. for me, a romney victory with a platform or mandate to do progrowth tax reform, likely to
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at least start the entitlement process would probably cause a decent bounce in business confidence to get capital spending going. then you could look at things like enterprise tech, storage, other areas of tech there were strong earlier in the recovery but petered out. >> that's interesting. why has that lack of confidence on the business side not been moved to a large degree by arguably better confidence on the consumer side. >> well, i think for me consumer confidence hasn't had much impact on spending patterns through this recovery. it's more about cash flow rather than confidence. other than last year around this time we had a little bit of confidence based drop in the savings rate as the housing market started to stabilize for the first time. you saw the savings rate go from 5.5% to three and three quarters buchlt the consumer has been
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spending his or her cash flow through the entire recovery. where that's gotten impaired with things like a spike in gasoline prices has been the only thing that slowed spending. business confidence has been -- again, remember, leverage in the business sector isn't as high so the business confidence dynamic has played a significant role in what's happened with capital spending. we had a bounce of business confidence and an improvement in the labor market that faded into the middle of 2011. >> it's hard to remember that. it seems to long ago. you mentioned a romney victory might allow you to focus on enterprise, tech and storage. would an obama victory lead you to some sectors? >> it would. it is the dividend payers. i understand why people would be concerned about a hike in the
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marginal tax rate of the higher income bracket and what it might mean for utility stocks. the cut in the dividend tax rate was thrown in at the last minute in the 2003 tax deal. utility stock surged. within three weeks they were back to where they started. we think you would get a similar reaction in reverse. you would sell the stocks off but the fed also surely replaces operation twist with another 45 billion dollar large scale asset such program in treasuries so the portfolio balance effect that's driven money into fixed income assets and driven money out of treasuries into investment grade credit and finally into high dividend payers would boost high dividend paying stocks or stocks we refer to as those with bond-like characteristics. the reits and utilities may be sold off but if president obama wins, buy those. the fed will keep monetizing the
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debt. >> either way it's a tsunami. the problem is we don't know which direction it will go. >> no. when we changed the price target we said it was a 50/50 proposition. it was in the margin of error. that's where it sits today. >> yeah. >> i do think this is a situation where something like a payroll report at times where it has a lasting effect and how you react the next day and assess probabilities will be particularly important. trying to make a big -- you know, reallocate capital ahead of time. >> barry, great stuff. thank you very much, as always. >> all right, carl. >> we're less than 24 hours away from election kday and the race is tighter than ever. when we come back, an obama supporter gives us take an the election. we'll be right back.
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coming up, find out why the manager of more than $100 million is getting short of stocks ahead of the election. big bank merger and we have the major players next. and the man who called for gas rationing is back with what we need to do now to deal with the gasoline situation. all of that at the top of the
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hour. >> see you soon. meantime the candidates criss-crossing the country. if they agree on anything the economic prospects could decide the election. with us you michael granoff from new york. good morning. >> thank you, carl. >> we have been hearing from various analysts all morning long, politicians saying if governor romney wins there will be a boost in business confidence, in capital spending, in hiring plans. almost immediately, they argue. i wonder how you push back on that. >> i run a private equity firm with investments in thousands of companies. we get information in a granular way from the kpaencompanies. my sense is they are not looking for immediate gyrations but long term policy and results. like most business people they
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make decisions baseded on that. i think if they are now seeing a more stable economy, making decisions based on that, my bet is that the president will be re-elected. that trend will continue and my guess is we'll see continued and access sel rated growth from here. if governor romney gets elected it's an open question what will happen with economic growth and what will happen with the economy and if that oh curse we'll see what happens. we'll have to respond to the uncertainty. >> why is the uncertainty larger with governor romney? does it involve a potential reversal in fed policy? why are things more of a guessing game under him? >> well, basically everybody knows pretty much where the vpt stands. people know what the president has been working on over the last four years. >> some say that's the problem. >> we have seen 32 months of growth in jobs.
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we have seen steady economic growth along that side. romney has talked about different economic policies. a lot of which the arithmetic doesn't add up. people have to see what happens, see what kind of president governor romney would be and adjust their economic behavior based on that. so there is inherent incertainty. >> in regards to the fiscal cliff, i wonder whether or not you think the political calculus changes for an incumbent who is re-elected in terms of willingness and ability to compromise versus someone who is going to have to run for office again someday. >> there i think both sides or either side will have an interest in trying to figure out how to deal with the fiscal cliff question because it has
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such horrible consequences no matter where you stand on the political spectrum. it's clear that president obama has raised things to deal with the fiscal cliff. revenue, spending, entitlements, defense. it's not clear where governor romney is. he talked about more tax cuts, increasing spending on defense. not clear where the savings would come from. on the president's side it's clear he's willing to make compromises necessary to keel with the fiscal cliff. with governor romney it's uncertain where he would take it. >> do you ever find yourself as a supporter of the president -- and i mean this as a sincere question, torn between your political allegiance and the way in which you want to see stocks, equities, market instruments perform? >> one lucky thing we have in the private equity world is that
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we are not dealing with the gyrations of security. we want long-term policies that work. things that deal with jobs up front, education, long-term to put us in a better competitive position. that's what we want to see. therefore it's not hard for me to reconcile political considerations with business considerations. >> those are long term issues, something we don't talk about enough. >> we need to. >> thank you very much for your time. we'll see what happens tomorrow. >> glad to do it, carl. >> the storm has passed but the lines for gasoline have not. up next, a live update on the situation from the fuel chokehold causing gas lines. ♪
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gas prices have been falling but it isn't easy for people to get in the areas affected by sandy. here's more with what is going on with regards to oh the refuelling effort. good morning. >> reporter: good morning, carl. the truck wrecks you can see behind me are back in action after nearly a week of being off line from hurricane sandy. they have been used several times to refill truck this is morning including to fill one truck with jet fuel, a first for the facility and in this case
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for southwest airlines. damage from the storm caused nustar energy to get creative. a week after the storm, the marine terminal is a mile down the road and lacks power. many of the buildings have been flooded and battered by tidal surges and debris. they are dealing with raw sewage. other terminals are in the same spot. as of today a half dozen are fully or partly running. i'm talking about facilities run by bp, hess, kindermorgan and phillips 66. these provide a link between refineries who make the products and the gas stations that distribute them. as the facilities are rehabilitated the continued power outages are a problem. gas stations around the region are struggling with a lack of electricity carl.
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even if they have the gas they can't necessarily get to the cars. >> thank you, kate. kate kelly joining us from new jersey. coming up, the one thing you should know for certain about investing after the election. "squawk boon the street" will b back. streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.
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gary is back with the one post election certainty. >> you know most of the action is driven by ben bernanke. if obama is re-elected the one thing for certain is the high dividend paying stocks will be sold. i can't give you one for romney. the high defensive lend paying stocks, the anticipated tax change will happen for sure. >> it seems like among the possible scenarios in the event of an obama re-election it seems like a no-brainer. >> yep. >> what if the governor wins as a challenger? we had barry knapp suggest long sorj, tech, that kind of thing. >> i don't think there is one for the equity markets. the one i gave you is the only one for sure. don't expect volatile any the stock market. i don't think we'll get it. >> a lot of shout


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